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Accounting & Taxes

Clawbacks and Cornerstone LPA 2.0

With respect to a Cornerstone LPA 2.0 agreement; under what conditions would partners in a venture capital fund give back up to 20% of distributions to satisfy [fund] obligations?
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Clawbacks would be very unusual - here are two examples of situations in which the Fund may need to claw back distributions to satisfy the Fund's obligations (but this is by no means all-inclusive):

  • If proceeds have been over-distributed, particularly in a fund with "deal by deal" distribution; or
  • In lawsuits where the Fund must indemnify. 

Please now refer to Cornerstone V3: https://govclab.com/2024/02/04/cornerstone-lpa-v3/

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